JoniCaryl said:
I have been considering buying an existing business. I signed a document agreeing to assume the outstanding business loan
Did I read that right? You've already signed an agreement to assume an outstanding business loan, but you're just CONSIDERING buying the business? You haven't signed a purchase agreement yet? That doesn't make sense.
If you're saying that you already signed an agreement to purchase the business and the terms included your assumption of the debt, then I ask you: Did the terms include full disclosure/due diligence on the part of the seller? If it did, and they did not comply, it sounds like a breach of agreement to me. If they did comply and you already paid something (consideration to bind the agreement) and you back out, then you could be in breach.
I highly recommend you consult an attorney. Also, depending on the type of business, you may want to look into doing an Asset Purchase Agreement (as opposed to a full business acquisition, with its existing debts, warts and all). A good attorney can help you with this.